Topic: Following the end of Q3, all lottery data are in the books and allow for a detailed analysis:

The most important brokered product at ZEAL, the Eurojackpot (EJ), has improved significantly yoy and qoq. Total spending rose by 28% yoy and 15% qoq to € 1.35bn, also due to one more draw than usual (27 vs. 26). Nevertheless, average spending per draw rose by 23% yoy and 11% qoq to € 50m which was the second highest figure since Q3’21. The main reasons behind this development were (1) two strong jackpot runs (from € 10m minimum to a large jackpot of € 113 and € 120m respectively) and (2) two consecutive peak jackpots of € 120m towards the end of Q3. Given the fact, that this Q3’s spending was the second highest in recent history, despite quarters with more peak jackpots, indicates a general demand shift towards this product.

Another highly popular product in Germany is the classic Lotto 6/49. Here, the development remains unfavorable for quite some time. It did not reach a peak jackpot since Q3’23 and jackpot runs are currently over very quickly, preventing high jackpots. Mind you, that this development is entirely based on probabilities, therefore a recovery can come any time. For players, however, this development lowered the product’s appeal, which shows in decreasing demand. Total (average) spending for Lotto 6/49 declined again by 5% yoy to € 812m (€ 31.2 per draw).

For ZEAL, this development comes in favorably, as the lottery brokerage business remains the largest and most important for now and the EJ is its most important product. Q3’25 is also the first quarter, where the positive effects of the price increase (introduced in Q3’24) are bottoming out. Growth is therefore dependent on past customer intake, but also again more dependent on the jackpot development, which influences spending behavior.

In sum, we therefore expect a strong Q3 with yoy and qoq improving KPIs. More specifically, Q3 sales are seen at € 55m (+24% yoy and + 9% qoq), whereas EBITDA is expected at € 14m (25.1% margin, -8.6pp yoy) on the back of very high marketing expenses of € 20m (+80% yoy). Mind you, Q3’24 did not see any peak jackpots, thus explaining the easy comparable base for sales and the strong comparable base for marketing expenses.

Based on Q4 estimates being only incrementally higher than Q3e, the recently raised guidance should be well in reach, in our view. Against this backdrop, we reiterate our BUY recommendation with an unchanged PT of € 65.00, based on DCF.